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Monday, April 3, 2017

The Economy: Don’t Look Now But. . .

The Economy: Don’t Look Now But. . .

Power Line - Monday April 3, 2017

by Steven Hayward

(Steven Hayward)

I don’t know what is going to happen with the economy, but one of the problems during the Obama years was the uncertainty of just how hostile to enterprise the Obama Administration was going to be. The stock market rally following Trump’s election could be attributed partly as a “relief rally” that they’d be spared from things getting even worse under a Nurse Ratched Administration, and partly optimism that Trump would improve business conditions.

The GOP failure on repealing and replacing Obamacare, and the evident confusion and difficulty surrounding tax reform, is casting doubt on the second half of this proposition, and to it is not surprising that the stock market has moved into a holding pattern.

The good people at the Wall Street Journal‘s Daily Shot, which charts the economic world in great detail, offer a mixed picture. Consumer confidence is at a sixteen-year high (see the first two charts below). But suddenly credit activity is falling off a cliff. Is this a sign of uncertainty of the Trump economic scene? Declining credit activity is sometimes an early sign of recession, but not always (and business capital investment continues to be relatively robust). Not sure what to make of all this, but it is worth filing away.